Critical Path Inc. will pay $17.5 million to shareholders who sued it and several former executives after the company restated its fourth-quarter 2000 earnings because of “financial irregularities” in its accounting.
Those irregularities also led the e-mail messaging services provider to fire two executives, president David Thatcher and William Rinehart, vice president of worldwide sales.
On Jan. 18, the San Francisco-based company reported an unexpected loss of $11.5 million, or 16 cents per share, for the fourth quarter. More than a dozen class-action lawsuits were filed by shareholders as a result.
In the settlement, Critical Path will pay $17.5 million in cash and issue warrants to buy 850,000 shares of its common stock at an exercise price of $10 per share. The company's shares closed Nov. 8 at $1.13.
Critical Path said in February that its board of directors formed a committee to investigate the company's accounting practices after finding a number of transactions that “put into question” its fourth-quarter 2000 financial results. Thatcher and Rinehart were then placed on leave. The company announced the resignation of CEO Doug Hickey on Feb. 9.